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RBS reaches $500 million settlement with New York over mortgage securities

Staff Writer |
Royal Bank of Scotland Group (RBS) has reached a $500 million settlement with New York state to resolve charges it misled investors by selling risky mortgage securities that contributed to the 2008 global financial crisis.

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The settlement announced on Tuesday by New York Attorney General Eric Schneiderman calls for the British bank to pay $100 million in cash to the state and provide $400 million of relief to homeowners and communities, including funds to build affordable housing.

RBS is the sixth bank to settle similar claims by New York, resulting in roughly $3.7 billion of settlements.

JPMorgan Chase & Co (NYSE: JPM), Bank of America Corp (NYSE: BAC), Citigroup Inc (NYSE: C), Morgan Stanley (NYSE: MS) and Goldman Sachs Group Inc (NYSE: GS) have also settled, with JPMorgan's roughly $1 billion accord in November 2013 the largest, the attorney general's office said.

RBS admitted to having in 2006 and 2007 misled investors into believing the residential mortgage-backed securities it sold were properly underwritten and complied with applicable laws and regulations.

The New York probe had focused on 44 securities offerings worth more than $52 billion, including many that plummeted in value as housing and financial markets fell into distress.

RBS last month said it has set aside 3.2 billion pounds (US$4.4 billion) to cover potential settlements with the U.S. Department of Justice and other regulators over RMBS sales.

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